Determinants of Intra-Industry Trade

Book excerpt: While most international economists will note that trade is beneficial, they will also comment on the adjustment costs that are usually incurred when factors of production, most notably labor, are redistributed between industries. A goal for many policymakers is to make that adjustment process easier and smoother for the factors involved, thereby highlighting the benefits of trade, rather than the costs of trade. But what are these industries that experience smoother adjustment costs? There is a growing constituency which believes that intra-industry or like trade is a characteristic of an industry with low adjustment costs. First published in 1997, this book hopes to address some of these issues and add to the growing discussion on the topic of intra-industry trade, with special attention placed on the relationship between the U.S. and Canada.